BSEC tightens direct listing criteria, extends price discovery to two hours

The Bangladesh Securities and Exchange Commission (BSEC) has tightened eligibility criteria for companies seeking direct listing on the stock market and revised price-discovery requirements, as the regulator prepares to reopen a route that remained closed for 16 years.

The BSEC Direct Listing Rules, 2026, gazetted on 18 October, introduce stricter financial thresholds for eligible companies, extend the minimum commercial-operation period and require reference prices to be supported by at least two valuation methods.

Under the new rules, scheduled banks, financial institutions and insurance companies must have a minimum net worth of Tk500 crore, based on their latest audited financial statements. The draft notification had instead required these institutions to have been in operation for at least three years.

The criteria for large corporations have also been tightened. The draft allowed companies with annual turnover or total assets of at least Tk500 crore to qualify. The gazetted rules remove total assets as an eligibility criterion and raise the minimum annual turnover requirement to Tk1,000 crore.

A separate provision in the draft for Bangladesh Telecommunication Regulatory Commission-licensed telecom and information and communication technology companies with paid-up capital of Tk300 crore has been dropped.

The rules also extend the minimum commercial-operation history from three years to five years, potentially narrowing the pool of companies eligible to use the direct-listing route.

Minimum asking price set at 25% below reference price

The final rules replace the term “floor price” with “minimum asking price” and require the latter to be set at least 25% below the reference price, compared with a minimum discount of 20% under the draft.

The gazetted rules also introduce a valuation-support requirement. A company’s reference price must be backed by at least two valuation methods, including at least one absolute and one relative valuation method.

The revised provisions establish a more explicit framework for determining asking prices and conducting initial trading, although their effectiveness in curbing excessive price volatility will depend on implementation and investor behaviour.

The price-discovery period on the first trading day has been extended substantially, from 30 minutes under the draft to the first two hours under the final rules. The gazetted copy also explicitly states that circuit breakers will not apply on the first trading day.

Buy orders during the first two trading days must be for between 100 and 1,000 shares in a single order. The final rules also prohibit any individual or institutional investor from purchasing more than 1% of the total shares being offloaded during the 30-day offloading period.

Several temporary trading restrictions proposed in the draft have been removed, including spot-market trading restrictions until noon for two days, suspension of trading on the third day and a prohibition on general investors selling shares during the first two days.

Uniform 10% offloading requirement

The final rules require all eligible companies to offload at least 10% of their paid-up shares within 30 trading days, replacing the draft’s differentiated requirements of 10% for government- and foreign-owned companies and 20% for other eligible firms.

The draft’s requirement to offload at least 50% of the proposed shares on the first trading day has also been omitted.

Procedural provisions have been revised as well. The rules replace “appeal against rejection” with “revision against rejection” and extend the time allowed to seek a revision from 30 days to 90 days after receiving a rejection order from the commission.

The publication requirement has been reduced from at least four national dailies – two Bangla and two English – to at least two newspapers, one in each language.

Direct listing returns after 16-year hiatus

The changes come after the finance ministry lifted a 16-year restriction on direct listings on 5 October, revoking a 2010 circular that had barred private, state-owned and foreign enterprises from using the route following formal recommendations from the BSEC.

Introduced in 2006, direct listing enabled companies including Dhaka Electric Supply Company, Power Grid Company of Bangladesh, Jamuna Oil, Titas Gas, ACI Formulations and Navana CNG to access the stock market.

However, concerns over aggressive price discovery and trading volatility – particularly surrounding Navana CNG in 2009 – contributed to the route’s suspension in 2010. Controversy resurfaced in 2020 when Best Holdings sought a direct listing on the Dhaka Stock Exchange.